Tag Archives: Nielsen

That was the subject of an email I received from a reader of my blog recently. The writer went on to eloquently state why he felt the way he did, even citing articles on the topic. He had my interest and I asked him if we could speak on the phone.

The BIG Question

This reader’s (who asked to be kept anonymous) big question was “What can radio do that other media can’t?”

And it’s a very good question.

In 2017 when many are using the internet for things that only radio could provide in the past, is radio’s future being the poor man’s smartphone, tablet or iPod when it could be more?

“NPR and SiriusXM, in addition to the new exploding podcast marketplace, have had no trouble creating personalities and programs,” but my reader writes “why does FM commercial radio continue to stick with playing the hits, past and present, at the expense of personalities, thinking it will make them money when the biggest radio companies have trouble paying off debts on the stations they seem to have paid too much for?”

Well it was a well-known fact all of my radio life that you make money in radio at the time you buy a radio station. Buying it right makes all the difference. And those big radio companies went on a buying spree using other people’s money (Wall Street) and it’s much like student loan debt, no one worries how much debt they’ve accumulated until they are asked to replay it.

Is Local Radio Local Anymore?

My reader quotes Westwood One’s Chief Insights Officer Pierre Bouvard from an AdExchanger interview as saying “A local radio station gives you traffic, sports, weather, great music, funny DJs and talks about your town,” he said. “Spotify has these robotic music playlists, which are awesome, but there’s no one telling you what happened at the Giants game last night.”

My reader says Pierre (who was my first Arbitron representative back in the 80s) makes a good point, but wonders if Pierre ever took the time to hear what passes for much of local radio these days. My reader feels that much of today’s FM radio stations do a combination of great music and robotic, Spotify-ish playlists, and relatively little in the way of “traffic, sports, weather…funny DJs and talk about your town” stuff.

Sadly, I’ve heard similar things said at radio meetings where the person starts off by saying “now don’t quote me on this, but…”

TELCOM Act of 1996

It was President Bill Clinton who signed the Telcom Act of 1996. That act was supposed to bring competition to the phone and cable television industries thereby lowering costs of each to the consumer. While that didn’t happen quickly (some might wonder if it ever did) it did cause the quick consolidation of the radio and TV industries. We went from a country where the largest radio operator could own 12AM-12FM-12TV stations to virtually whatever their pocketbook could afford. And with Wall Street Bankers waiting in the wings, what a company could afford was a lot.

Low Power FM & Translators

For the non-radio folks who read this blog, Low Power FM signals and Translator signals are virtually the same thing, with the exception being that Low Power FM stations originate programming and translators don’t. Both are received over the air on the FM radio dial. Both have increased the number of FM signals on-the-air in America today.

The latest FCC (Federal Communications Commission) report as of the end of December 2016 shows that there were 4,669 AM radio stations on the air in America. Over on the FM dial, 16,783 signals now beat the airwaves (FM, FM educational, translators and low power FM).

To put things in perspective, at a time in America’s radio history when the number of FM signals equaled the number of AM signals on the air, 75% of all radio listening was to FM. So you can only imagine what it’s like today.

93% of Americans 12+ are reached weekly by AM/FM radio says Nielsen.

So while the Telcom Act of 96 caused radio to consolidate under fewer owners who own more stations, adding to the signal overload was the advent of low power FM and translator signals. So much to program and no one home to do the work.

Enter computers, voice tracking, and syndication. This is same computer technology that is employed by Pandora, Spotify, Radio Tunes, SoundCloud and many others.

When TV Challenged Radio

In 1952 TV was born again. It was birthed just before World War II but the war years put broadcast radio/TV development on hold. After the war ended, things began to ramp up quickly for TV.

In 1953, Elmo Ellis was hired to fix 750AM – WSB in Atlanta. Ellis would write about “Removing the Rust from Radio Programming” for Broadcasting/Telecasting (now called Broadcasting and Cable magazine).

One of the points Mr. Ellis made was that a stack of records and a turntable do not a radio station make, though many broadcasters persisted in that very belief.

It was the very same philosophy I employed when I launched a “Music of YOUR Life” radio station. I felt that to be successful, you needed more than just Al Ham’s music list, you needed the personalities that complimented the music.

Both my reader and I are in complete agreement in that a radio station is more than just a song list.

Less Is More

The problem today is that with the “land rush” by broadcasters to own as many signals as they can, we have seen our country’s biggest broadcasters put themselves into a debt situation they cannot get out of and smaller broadcasters have signals and streams to manage but not the revenues to properly execute them.

If we go back to the beginning of broadcasting in America, we see that the FRC (Federal Radio Commission) that predated the current FCC felt that quality over quantity of radio stations should be the rule of measure. By limiting the number of stations, the FRC was attempting to insure the content of those stations on the air would be of the highest quality and also by limiting the number of stations; the advertising revenue that is the life blood of free over-the-air radio could be sustained.

What Can Radio Do That Other Media Can’t?

This brings me back to the question my reader originally posed and asked me to answer.

But before I do, I’m going throw that question out to my other readers – to date over 80,000 from all over the world – to weigh in with their thoughts.

During this year’s football season, viewership to the NFL games was down. A lot of reasons were offered as to the reason why. I’m sure you have your own theories. But when it comes to the Super Bowl – “America’s party Sunday” – surely that would again show an audience increase. It didn’t.

M*A*S*H

For many years, the finale of the TV show M*A*S*H was the most watched television show, until the year that a Super Bowl would surge ahead. For a couple of years, each year the Super Bowl of that year would beat the viewership of the past year and ad rates would go up right along with the viewership. Ad clutter too.

$5 Million per 30-Second Ad

This year FOX trumpeted that it sold Super Bowl LI half-minute ads for an astounding $5 Million per ad.

Viewership to the fifty-first Super Bowl game was, like the rest of this year’s NFL season, down.

We have to go back to 2012 to see an audience this small for football’s big game.

Game Stats

Now don’t get me wrong, the NFL is still the 800-pound sports franchise to be reckoned with when it comes to broadcast. But nothing goes up forever and we may be seeing a peak.

In a scholarly paper authored by Auburn University’s Herbert Jack Rotfeld he writes, “the increasing advertising to editorial ratio is causing audience inattention and consumer complaints.” And that “more effective advertising would mean that there would be less of it.”

“Abuse of audiences by intrusive advertising lowers the effectiveness of the entire communications form.”

Radio’s Ad Clutter

About a year ago this month I wrote an article entitled “Are We Killing the Golden Goose” In that article I compared the story of Aesop’s fable of the goose that laid the golden eggs to what I saw going on with the swelling advertising inventory in radio.

Radio is like a golden goose. It has the ability to deliver unlimited revenues to the bottom line for its owners. Having an FCC license was for many years considered akin to having a license to print money.

Radio is the #1 Reach & Frequency Medium

In June 2015 my good friend – and my very first Arbitron representative when I started managing radio in a rated market – Pierre Bouvard would announce that radio was now America’s #1 REACH MEDIUM.

Radio had always been America’s number one frequency medium (the ability to reach a listener with the same message multiple times) but now it beat TV and all other ad-supported media in reaching the most people too.

That’s BIG!

It’s why I’m concerned about ad clutter.

No Ad Blocking in Radio

Radio, unlike online and TV, doesn’t have ad blocking. Online ad blocking is epidemic. TV has the dreaded DVR that allows viewers to fast-forward through the ads.

Radio doesn’t have to deal with these issues, yet.

But that doesn’t mean it can abuse its audience.

Podcasting

Everywhere I turn I see that podcasting is increasing in audience size. But what I’m also reading is how effective the ads in podcasts are. Could the reason be that a single sponsor usually supports podcasts and the ad is often delivered by the very voice that also creates the content that the listener tuned in to hear?

Stephen Covey

Covey wrote in his book “The Seven Habits of Highly Effective People” “when people fail to respect the P/PC Balance in their use of physical assets in organizations, they decrease organizational effectiveness and often leave others with dying geese.”

The bottom line is the future of radio will be determined by the vision of the people leading the radio industry.

News is about the exception. A car driving down the main street of your hometown is not news. But let that “radio on wheels” run into something and that’s news.

It’s the same with radio listening. The fact that 92% of the population of America listens to radio every week is not news, but finding out one of them listens to something other than radio grabs the headline.

Millennials Outnumber Boomers

It was just a year ago that Millennials outnumbered us Baby Boomers. That was news, because the Boomers have ruled the roost for several decades. So how does radio listening stack up for the Millennial generation? 91.3% of Millennials are reached by radio every week. 94% of GenX’ers are reached by radio and us Boomers come in at 93.5% reached by radio every week according to Nielsen.

Millennials Don’t Hate “Old Media”

MediaLife magazine just reported on what’s really happening with Millennial media usage versus what many believe is happening. Example: Newspapers – more Millennials read a newspaper once a week than use a tablet. Another example: Radio – more Millennials crank up the radio (80%) than have an MP3 player (45%).

What Millennials Aren’t In-Love With

What you might find surprising is that Millennials aren’t swooning over Satellite Radio, smartwatches and connected cars. In fact, Millennials would rather ride share or use public transportation than even own a car.

Time For Another Paradigm Shift

It was Thomas Kuhn who is credited with coining the term “paradigm shift.” He defined it as changing from a set of beliefs or views that members of a community all shared.

It’s hard to predict the future and many of the models people develop to predict levels of risk really miss their mark. Two examples are the Fukushima nuclear disaster where the “experts” said a twenty-foot wall would protect the plant from any Tsunami. However it was a twenty-four foot wall of water than would take out the plant. And everyone knows that insurance companies are in the business of predicting risk, its how they come up with the premiums people will pay them. So how did AIG miss the financial collapse in 2008 that would bring down the company?

When commercial radio was born in 1920, P&G was quick to move their advertising monies from print to radio.

When TV came along, again P&G would lead others in moving their advertising monies to TV. (The radio & TV “Soap Opera” name comes from the creation of serial dramas that were created by P&G to sell their soap products in.)

When the internet came along, P&G was a leader in moving their ad monies from traditional broadcast to online.

“Procter & Gamble Co., the biggest advertising spender in the world, will move away from ads on Facebook that target specific consumers, concluding that the practice has limited effectiveness.

Marc Pritchard, P&G’s chief marketing officer, said the company has realized it took the strategy too far. ‘We targeted too much, and we went too narrow’

P&G could be the bellwether on how consumer goods companies and big brands use digital advertising. Over the past year some marketers, specifically consumer product companies, have discovered they need to go ‘much more broad’ with their advertising”

Bob Hoffman, “The Ad Contrarian” has been predicting this for some time. He recapped his prediction on a recent one of his blogs that you can read here.

Advertising Is Sloppy

The problem with today’s “targeted advertising” is that it misses lots of targets. Great advertising works, in part, because it’s sloppy. By that I mean it produces results because it reaches a large and diverse audience through a mass medium like radio.

Radio is the number one reach and frequency medium in America today.

I’ve advertised on radio stations I’ve run for help for positions we had open. What never ceased to make an impression on me was how many people I’d interview who came in for the advertised position and had never heard the ads. How did they know about the opening? A friend of theirs who heard the ad told them about it. That’s what I mean by advertising being sloppy. That’s what I mean about hitting the target even when you are not aimed at it.

Great Ad Copy

The one thing that is critical is your advertising copy. Great copy will produce results on virtually any radio station. It’s not about being on the most listened to station in the market that will produce results for the advertising client, it’s the radio message itself that will make the difference. Next, it’s the ability to deliver that message consistently day-in and day-out, fifty-two weeks a year.

Breaking News

Radio has always been the advertising medium that gets results when used correctly.

To be successful, you need to build your brand in the mind of the consumer. Radio let’s you whisper in the ear of the consumer every day.

Radio will not only help you build your brand but keep it top of mind too.

Call it a subscription, a membership fee or a paywall, what happens when they are eliminated? In Angie’s List’s case, less than one percent of Americans were members at the $40/month fee that had been in place. Paying that fee let people see the reviews of other members that had experienced certain businesses or services they had used. Now everyone can see those reviews. Angie’s List had developed a reputation for its members writing rather substantial reviews as well as being a website that is strong, trusted and contains valuable content.

Why Did Angie’s List Tear Down Their Paywall?

Angie’s list is a publicly traded company. Their stock is down seventy-five percent from three years ago. Management is under pressure. Tearing down their paywall means increased page views. When page views go up, revenue goes up. See the strategy?

Could SiriusXM Follow Suit?

Satellite radio currently captures about ten percent of radio listening and mostly in vehicles. The new digital dashboard entertainment centers will be a gateway to Pandora, Spotify, Apple, YouTube and more. Having an XM button on my Honda Accord, I know that my access can be selectively turned on or off by SiriusXM. When they do one of their free listen promotions, they don’t turn on all the channels, just the ones they think will hook me to listen. So, I would imagine, they could create a group of channels that could be on all the time and carry a limited commercial inventory attractive to national advertisers. Like the most popular musical venues, such as adult contemporary. Even if they only turned on the top five music formats, it would mean drivers could listen to them wherever they drove across America, plus SiriusXM would have the ability to pop in promos for their other channels that remained behind a paywall. It’s almost too scary to consider the possibility.

Teens Love Streaming

Teens love streaming audio and their smartphones. According to the Music Business Association and their data partner LOOP, teens spent 51% of their listening time on a typical day streaming their music versus only 12% of their time with AM/FM radio. This is a media usage habit being formed in the next generation. It not only affects traditional AM/FM broadcasters but satellite radio as well. This is a problem that needs to be addressed.

NextRadio App

Thanks to Jeff Smulyan and Emmis, the NextRadio App is the way FM broadcasters can get their audio into those smartphones, without running up a user’s data plan. However, Sprint has already removed many audio streaming services from running up their data plans by letting their customers listen as much as they want at no extra charge. Since teens avoid paying any fees whenever possible, free is always an attraction.

Less Than 1% of World Pays For Streaming Audio

AM/FM radio has been built on free. That’s an advantage that too often gets taken for granted. According to Nielsen 61% of people find out about new music via their AM/FM/satellite radio.

The FCC just published their latest numbers for broadcast stations as of June 30, 2016. We are approaching 24,000 signals for radio in America. 19,194 of those signals are FM and 4,676 are AM. Plus we have two satellite radio signals, Sirius & XM, which are now under a single owner.

Pay & Free

It doesn’t take a whole lot of imagination to see satellite radio one day deciding to have the best of both worlds. Offer premium pay channels to those willing to pay for them and at the same time create a free tier of channels that could be ad supported by national advertisers.

What history shows us are things that happen in other industries and services eventually make their way around to virtually all of them. It’s only a matter of time.

This was certainly true in the first golden age of radio, that period of time from its birth in 1920 through the mass takeover of television in the 1950s. Once TV came along, radio had to reinvent itself.

That reinvention came in the form of Rock ‘N’ Roll, the transistor radio and the car radio. Radio was portable, TV was not. TV took over the living room, but radio took over every other place.

In my life, I’ve lived through every new form of technology that was going to be the death of radio. The 8-track tape, the cassette tape, the CB radio, the CD player, the CD changer, the cell phone, the MP3 player, and most recently, the World Wide Web, Internet streaming and wireless broadband.

So you might be surprised to learn that at the 2015 annual meeting of the Association of National Advertisers Masters of Marketing Conference in Orlando, Florida attendees learned that when it comes to adults 18+, RADIO reaches 93% of them every week. That’s more than TV, more than smart phones, more than PCs and more than tablets.

I remember when I got my first GM position. It was a daytime radio station that featured Al Ham’s “Music of YOUR Life” format, big band music for those not familiar with the programming. Yes, my audience was old. But only according to the calendar, but not the way they thought about themselves.

It was always a tough putt with new advertisers, getting across this concept that you are as young as you think. So I wasn’t surprised to learn that one of the sessions talked about “APT.” APT was all about the “Age People Think” not demographics.

I’m not sure that lumping people by demographics was ever a sound marketing idea, but like a lot of bad ideas (buying radio on a Cost Per Point basis) in advertising, people do what’s always been done and ignore if it’s a sound way to place advertising.

A lot of my radio stations over my career have focused on an older demo. When Ken Dychtwald’s book “Age Wave” came out in 1990, I read it with enthusiasm. Dychtwald told of the massive population and cultural shifts that would be taking place because of the Baby Boom Generation. He put forward how the boomers would shift the epicenter of consumer activity from a focus on youth to the needs, challenges, and aspirations of maturing consumers. Those predictions are playing out today.

So again, I wasn’t surprised to read that at the ANA gathering attendees were told that old people were a growth market. In light of the trillion dollars in student loan debt, the millennials are cash challenged in a way that the Boomers are not.

I grew up in a Chevy family. Remember those days of yore? Chevy families and Ford families competing for bragging rights as to which drove the better cars?

Many marketers would have you believe that we are now stuck in a rut with our product choices and only the young are pliable enough to be swayed to try or change brands. So let’s see how that plays out in my family. I have two older brothers; one drives a Honda and the other a Toyota. How about our kids? Well we have a BMW, Mercedes Benz, Hyundai and Honda. In my case, I drove a Hyundai for the past eight years before switching to a Honda Accord; so much for that concept that once you are stuck in a brand, you stay there for life. Even my toothpaste is not the brand I grew up using.

Everything has changed about the world with the exception the way marketing is created and advertising is bought.

One of the big changes is that RADIO is back! It’s the massive reach medium that advertisers seek to expose their products and services on, except that they don’t know it.

Radio needs to use some frequency and repetition to get the word out.

Willie Sutton said he robbed banks because that’s where the money was.

If you’re an advertiser, you need to advertise where the people are and that’s today’s RADIO.